Management Functions and Multinational Corporations Planning in Multinational Corporations (how organizations will achieve its objectives both domestic and international) Primary differences are coming from the components of planning. Plans for multinational organizations could include: 1. Establishing a new sales force in a foreign country 2. Developing new manufacturing plants in other countries 3. Financing international expansion 4. Determining which countries are most suitable Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Management Functions and Multinational Corporations Components of International Plans Imports/Exports License Agreements Direct Investing Joint Ventures Planning and International Market Agreements The European Union (EU) North American Free Trade Agreement (NAFTA) Asian-Pacific Economic Cooperation (APEC) Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Management Functions and Multinational Corporations Managers should have a practical understanding of such international environmental factors as economic, cultural conditions and the laws, political circumstances., International environmental factors that affects strategic planning has lately became very important. An International Market Agreement: is an agreement among clusters of countries that facilitate a high level of trade among these countries. Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Management Functions and Multinational Corporations If an organization is from a country that is party to an international market agreement, the organization’s plan should include steps for taking maximum advantage of that agreement. If not; plan must include steps for competing with organizations from nations that are parties to such agreement. Most Notable International Market Agreements The European Union (EU) North American Free Trade Agreement (NAFTA) Asian-Pacific Economic Cooperation (APEC) Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Management Functions and Multinational Corporations Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Management Functions and Multinational Corporations Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Management Functions and Multinational Corporations Organizing Multinational Corporations Organization Structure Selection of Managers Managerial Attitudes Toward Foreign Operations Advantages and Disadvantages of Each Management Attitude Influencing People in Multinational Corporations Culture 1. Acquire a working knowledge of the languages 2. Understand the attitudes of people 3. Understand the needs that motivate people Controlling Multinational Corporations Special Difficulties Improving Communication Transnational Organizations Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Management Functions and Multinational Corporations Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Management Functions and Multinational Corporations Selection of Managers Managerial Attitudes Toward Foreign Operations: (Over many years they could identified mainly 3 attitudes) Ethnocentric attitudes: Reflects the belief that MNC should regard home-country management practices as superior to foreign country management practices. Advantages: Keep organization simple but it prevents feedbacks from overseas. Polycentric attitude: foreign management practices should generally be viewed as more insightful than home- country management practices. Advantages: permits tailoring of foreign organization segments to their cultures but creates many segments. Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Management Functions and Multinational Corporations Selection of Managers Geocentric attitudes: Overall quality of management recommendations rather than the location of managers should determine the acceptability of management practices used to guide MNC. Adv: promotes collaboration between foreign and home- country mgmt and encourages the development of managerial skills regardless of the organisational segment/country in which managers operate. Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Management Functions and Multinational Corporations Influencing People in Multinational Corporations Culture (is the set of characteristics of a given group of people and their envirınment; such as norms, values, beleifs, attitudes, habits, skills , ….) 1. Acquire a working knowledge of the languages 2. Understand the attitudes of people 3. Understand the needs that motivate people Controlling Multinational Corporations Special Difficulties Improving Communication Transnational Organizations Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Management Functions and Multinational Corporations The Most widely accepted methods for describing values in foreign cultures was developed by Geert Hofstede. National Cultural Values vary on 5 basic dimensions: Power Distance: degree to which a society promotes an unequal distribution of power. (Mexico &France more autocratic, USA more democratic) Uncertainty Avoidance: extent to which a society feels threatened by uncertain or unpredictable situations. (Greece and Japan) Individualism and Collectivism: (China & S.Korea Collectivist, Canada, USA, Australia Individualist) Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Management Functions and Multinational Corporations 4. Masculinity and Femininity: Macsuline values, competitiveness, assertiveness, success and wealth; Femininity values: care for nurturing others, increase quality of life (Scandinavian Countries) 5. Short Term and Long Term Orientation: (Asian countries more on Long Term success, Pakistan on short term success) Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Improving Communication: Communication network/information system Controlling MNC’s Special Difficulties: Problems of different currencies, e.g. Compare profits, prices and etc. Distances makes it difficult to keep a close watch on operations. Improving Communication: Communication network/information system Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

Transnational Organisations/Global Organizations They represent the fourth, and maximum, level of international activity as depicted on the continuum of international involvement presented earlier. (Nestle) Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

International Management: Special Issues Maintaining Ethics in International Management Respecting Core Human Rights Respecting Local Traditions Determining Right from Wrong by Examining Context Preparing Expatriates for Foreign Assignments Culture profiles Cultural adaptation Logistical information Application Copyright ©2012 Pearson Education, Inc. Publishing as Prentice Hall

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Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright ©2012 Pearson Education, Inc. publishing as Prentice Hall